Having money is a good thing, having the right amount of money at the right time is a great thing.

Cash flow management is like a calendar of when you will collect money and when you need to pay out money.  If you have a $500 supplies payment due Thursday and $25,000 in sales coming in on Friday, you have a problem.  You will have plenty of money, but the money is coming too late to cover your expenses in a timely manner.  You will have to borrow money for a day, which creates unfortunate interest expense.

Consumer sales are often paid at the time of purchase or when the work is complete.  Businesses to business sales usually have a significant lag between the completion of the work and payment.  

There really is no shortcut for a small business, you have to sit down with a piece of paper and map out when you make payments and when payments are received.  Providing incentives for quick payment is often cheaper than paying interest on lines of credit.  It is always financially smarter for business to avoid as much debt as possible.  Debt becomes a fixed expense, where incentives vary with the level of sales.  Since sales levels in small business often fluctuate significantly, servicing debt can put you out of business if sales lag at the wrong time.  Murphy’s Law; if a bad thing can happen, it probably will at some point.

You have to budget for large ticket items that occur on an infrequent basis; such as insurance payments or professional licensing.   For these reason, you may have a large cash position at various times, but you have to be very careful to budget money during surpluses to cover future expense; or sometimes more importantly, to cover future growth opportunities (footholds I will discuss later).  

Managing your cash flow is a bit tedious, but pays for itself many times over.